This story is developing.
President Joe Biden may extend the student loan payment pause.
Here’s what you need to know.
In response to the ongoing Covid-19 pandemic and pressure from progressive Democrats, Biden may extend the student loan payment pause that is scheduled to expire on January 31, 2022. While the Biden administration hasn’t made a final decision, Politico reports that Biden is considering whether to postpone a restart of federal student loan payments. In recent months, progressive members of Congress, including Senate Majority Leader Chuck Schumer (D-NY), Sen. Elizabeth Warren (D-MA) and Rep. Alexandria Ocasio-Cortez (D-NY), among others, have called on Biden to continue temporary student loan forbearance. The Biden administration may make an announcement this week regarding its final decision, according to Politico.
Student loans: student loan relief
Federal student loan borrowers have had temporary student loan relief since March 2020, when Congress passed the Cares Act. Under the at legislation, which President Donald Trump signed, borrowers had the following benefits:
- no mandatory federal student loan payments;
- 0% interest rates on federal student loans; and
- no collection of student loans in default
Trump and Biden each extended this student loan relief twice, resulting in the current January 31, 2022 expiration date. Collectively, through January 31, 2022, student loan borrowers will get more than $110 billion of student loan cancellation as a result of this student loan relief due to the Covid-19 pandemic. This is based on $5 billion in interest savings each month for student loan borrowers, according to the U.S. Department of Education.
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Student loan relief: reasons for and against extension
There are several reasons why progressives want to extend student loan relief, including:
- help student loan borrowers who can’t afford student loan payments;
- stimulate the economy; and
- ongoing Covid-19 pandemic.
There are several reasons why others, including the Biden administration, doesn’t want to extend student loan relief:
- student loan borrowers have had nearly two years of student loan relief with no federal student loan payments, including four extensions;
- economy is recovering;
- student loan borrowers received more than $110 billion of student loan cancellation; and
- other economic priorities such as the Build Back Better Plan.
Student loans: next steps
There is no guarantee that Biden will extend student loan relief. There is also no guarantee for how long an extension of student loan relief will be. Therefore, be prepared that student loan payments could restart on February 1, 2022. Make sure you’re prepared for student loan payments to restart and that you have a student loan repayment game plan. Here are some popular ways to save money and pay off student loans faster: